How 0.5 NANO Helped Reddit User Windows7733 Survive the Venezuelan Financial Crisis
To some, cryptocurrency is reserved for illegal activities and gambling, but that might change after they hear what stemmed from a native Venezuelan’s post on how much 0.5 NANO helped him. Circumventing any centralized charity, the NANO community was able to directly provide much needed humanitarian aid to the Reddit user’s friends, family, and neighbors. Let’s take a look at how it got to this point:
Venezuela has been economically buckling under the authoritarian regime of Nicholas Maduro. He stepped in after Hugo Chavez in 2013, and since then, he’s been heavy-handed in keeping Venezuelans under his control. Along with police beatings, government crackdowns, and fraudulent democracy, Maduro’s administration has lost almost 50% of the country’s GDP over 5 years — though he blames the U.S. for the countries woes.
While Maduro’s administration has kept the country in a perpetual state of economic crisis, the biggest blow to his people has been the recent devaluation of the Venezuelan bolivar via hyperinflation — emphasis on hyper. In 2014, the inflation rate was already an abysmal 63.4%, but it has been rising to historic levels. It’s gotten so bad that this week the International Monetary Fund made an atrocious prediction for the bolivar’s inflation by year end. Want to take a guess? Hint: it has 7 digits.
A 1,000,000% inflation rate. Hyperinflation to this level has only happened twice in the past 100 years: once in 1923 with the Weimar Republic and more recently in the 2000s with Zimbabwe.
The Venezuelan government’s best solution thus far for stopping the inflation was removing three zeroes off of the bolivar. As if that transparently ineffective move wasn’t enough, a month later, Maduro made a speech to cut five more zeroes from the bolivar. The result: still no respite for his people.
For many Venezuelans, this inflation has very real consequences. People have to wait hours in line at a bank to withdraw cash that’s worth so little it can barely buy them anything at all. In fact, 79% of Venezuelans found themselves unable to afford food this year. With investments and money becoming worthless in such a short time span, it’s not hard to to see why many Venezuelans have left or want to leave the country.
In response to their economic woes, one of the desperate attempts to reintroduce economic stability the creation of a new “cryptocurrency” called the Petro. The cryptocurrency is supposed to be priced in the ballpark of one Venezuelan barrel of oil and is modeled after the NEM blockchain.
There are a issues with this new coin though. First, it’s antithetical to what the cryptocurrency community stands for, as it’s created and owned by the government. Also, there is no transparency behind the coin, and the whitepaper never explains exactly how the Petro is pegged to a barrel oil. Finally, the coin was pretty much dead on arrival because no one has any faith in Maduro (the United States instantly banned it). You can read more about the Petro here.
On the other hand, Bitcoin has practically been a bedrock of cement compared to the bolivar, and the cryptocurrency’s transaction volume has soared in the last several years in Venezuela. Bitcoin as a currency has been a relief for many, and Bitcoin mining has become a popular way to generate cash. As per usual, the police have cracked down on it. Still, cryptocurrencies can provide immense value to ailing people in collapsing countries.
This brings us back to the Reddit story with user Windows7733. In early July, he posted about how he received .5 NANO from someone who wanted to help him. That’s about $1.25, yet for him it was more than a month’s salary. The post evoked empathy from the NANO community, and he soon received hundreds of NANO. He went on to post pictures of all the basic necessities, food, and medical supplies he was able to purchase with his NANO, which gave to struggling friends, family, and neighbors in his community.
Beyond just a feel good story, this is a great example of the practical application of cryptocurrency. In a country facing a humanitarian crisis, hundreds of lives were positively affected by individual actors without a middleman. Mainstream adoption of cryptocurrency has a lot of potential, especially for developing countries where economies aren’t stable. Hopefully, the state of Venezuela, once the wealthiest Latin American state, stabilizes itself before this is the case.
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